Import Compliance Becoming a Team Effort Beyond Customs Brokers, Lawyers Say

"People misunderstand the role of the customs broker. The customs broker is basically there to expedite the submission of the entry summary information. They're not there to classify your goods," said Gregory Husisian, a Foley lawyer.

Customs brokers do a lot of work already, and "they might suggest the classification [or] say [that] this doesn't seem right. But if they're not there to classify your goods, they're not there to question whether or not your goods actually contain all the value of the assists and things like that. They're mostly there to take the information that you are giving them and to file it so that you have an orderly entry process. ... So don't use them as your compliance program. Use them as they're intended. They're there to help you clear your goods," Husisian said.

While customs brokers are important, consultants and trade attorneys are needed in part because of the "huge increase" in CF-28 and CF-29 forms sent out by CBP, according to Mary Cagle, an international trade consultant and former CBP auditor. These forms, which CBP sends out as a means to scrutinize imports and potentially levy penalties, require companies to submit a wealth of information, from the whole entry packet, to the bill of materials to anything that can substantiate the country of origin and support preferential claims, Cagle said. If a broker fails to send all that information, it can result in an audit, she said.

"I've had clients who have numerous CF-28 and 29s. That's not normal, guys. That is not normal," Cagle said. "It may be routine and Customs hasn't gotten to you yet, but it is not normal. If you have a high volume, you need to start taking a look at what's going on. Is there any validity behind what Customs continues to question you on or rate advance you on through the CF 29?"

Cagle also said importers should move from a "decentralized" trade compliance program to a centralized trade compliance program, which can standardize an importer's responses to CBP.

Under a decentralized program, "locations may have different customs brokers with different practices and methods of operation -- again, leaving you as an importer wide open for errors, for missed filings," Cagle said. A decentralized program means that "your teams are going to be more siloed ... I can tell you from experience that the more siloed an organization is -- 'This person does this. We don't cross this line. This person does this. I stay in my lane. I only do these tasks.' -- that doesn't work today. It does not work today. It should be an interactive process in your communication and your compliance program."

What is helping CBP ramp up enforcement is the ability to drill into a company's data in ACE and look at a company's shipments even before they've arrived in the U.S., according to Cagle.

Cagle stressed that being proactive is "essential" when responding to changes in tariff provisions, as CBP's focus to increase enforcement could potentially lead to higher penalties. Being proactive requires the adoption of additional compliance strategies, such as ensuring that companies abide by regulations governing transshipment and rules of transformation, while preventing the misclassification of goods and assigning proper content values.

"We cannot stress enough how important proper classification and HTS [Harmonized Tariff Schedule] determination are. You need to have a complete understanding of the classifications that your company uses during import," Cagle said. That's because CBP is using enhanced technology, data analytics and trade monitoring systems to detect non-compliance, such as tariff evasion and transshipment schemes, she said.

As companies develop and refine their customs compliance programs, they should keep some ideas in mind, according to Husisian. One idea is to add flexibility, whether that means setting up alternative or secondary suppliers, vetting people in advance or dealing with qualification issues, Husisian said.

Importers should also consider working risk management into contracts, Husisian said. That may mean negotiating with suppliers about the degree to which various parties share the burden of paying tariffs.

"It's really important instead to have tariff-related provisions that will allow you to anticipate and share tariff-related risks. Figure out exactly who's going to be the importer of record, whether you're going to have reimbursement of tariffs behind the scenes, things like that," Husisian said. "You want to be very precise in your contracts in terms of risk-shifting and risk-sharing provisions."

Husisian also stressed the importance of ensuring proper classification so that goods aren't undervalued, developing a good system of post-entry checks "where you can confirm that your customs broker did everything correctly," and potentially conducting internal customs audits.

Companies should also consider preparing reasonable care memos and requesting CBP rulings, as well as filing prior disclosures.

Filing prior disclosures "has been a long-term trend -- that people were filing more and more prior disclosures each year. We used to handle one or two a year, and now we handle dozens a year. And I think a lot of this has been driven, even before the Trump tariffs, by the better use of data mining by CBP," Husisian said.